Do Online Reviews Really Affect Your Business?

By Lan Nguyen

Online reviews are just like a double-edged sword; they can help you make money and increase sales revenue, but can also spoil your reputation and hurt your business financially.

Even if your products and service is excellent, it’s hard to make everyone happy. There is always someone who can potentially say something bad about your business, and the worst part… many times you have doubts that he / she was really a client of yours!

Recently, a D.C. based contractor, Dietz Development LLC, decided to sue its former customer over negative reviews that were posted on Yelp and Angie’s list about the company’s renovation work to her house.

In a December 4th article in the Washington Post, the story mentioned that Dietz Development filed a $750,000 internet defamation lawsuit against Jane Perez, who claimed that the company had damaged her home and that jewelry went missing.

Dietz said that these reviews scared customers off and led to a $300,000 loss in business.

Although Perez’s review remains on Yelp while Dietz awaits a trial date to be set, it might take a long time for business to come back to normal regardless of whether he wins the case or not.

And it might take longer to regain his customers’ trust and have them push the incident out of their minds.

Below is Perez’s Yelp review about Dietz Development

Here is a negative review found from an online user who went to a Japanese restaurant in Manhattan.

And another one of a user who left his bad experience about a burger at a Brooklyn restaurant.

Whether those reviews are true or false – and the verification process is still questionable at best, low star ratings will likely cost the owner business and money.

According to a NBC News’ articleposted in Sept. 2012, positive reviewson Yelp can create a significantly different result to restaurants; “Higher-rated restaurants are fully booked half the time, while those with lower ratings are booked only about a third of the time”.

A Berkeley study published in October 2011 found that a half-star change in a Yelp restaurant’s rating can impact the restaurant tremendously. That half-star improvement on Yelp’s 5-star rating makes it 30-49%more likely that a restaurant will sell out its evening seats.

Yelp was founded in San Francisco on July 2004, and received 84 million monthly unique visitors in Q3 2012.

The enormous following that 3rd party review sites receive show how important it is for business owners to keep their business profiles clean, especially on sites like Yelp, Google+ Local, etc. The longer negative reviews with low star ratings remain, the higher the cost to the business.

Have you kept on top of your online reviews and reputation recently? If not, you might be leaving money on the table.